Shellpoint Gearing Up For Private-Label RMBS Issuance

Posted by Patrick Barnard on June 19, 2013 No Comments
Categories : Required Reading

In another sign that the market for non-agency mortgage bonds is starting to rebound, Shellpoint Partners LLC, the home lender headed by mortgage bond pioneer Lewis Ranieri, is preparing to sell up to $251 million in residential mortgage-backed securities (RMBS) in a deal underwritten by Credit Suisse Group AG.

The transaction, which could come as soon as this week, is significant because growth of the non-agency mortgage bond market is regarded by investors as essential to reducing the housing market's reliance on U.S. taxpayers, who paid billions to bail out government-sponsored enterprises Fannie Mae and Freddie Mac at the height of the financial crisis.

In May, the U.S. Securities and Exchange Commission approved a registration filing that allows Shellpoint to issue up to $2 billion in private-label RMBS.

Unlike the loans sold through the programs of Fannie Mae and Freddie Mac, private-label mortgage bonds do not come with a government guarantee.

‘We intend to be a significant issuer of new issue RMBS and help define the new market standards and practices that will restore a healthy housing market as one of the vital cornerstones of the economy,’ said Saul Sanders, co-CEO of Shellpoint, in a May release.

Sales of RMBS have been slowly recovering since the start of the downturn in 2008, which initially halted their sales. According to data compiled by Bloomberg, deals tied to new loans have exceeded $7 billion so far this year, up from $3.5 billion in 2012 and significantly up from about $700 million in 2011.

During a recent appearance at the Bipartisan Policy Center in Washington, D.C., Ranieri reportedly said it is ‘completely unacceptable’ that the federal government backs about 90% of the mortgage market.

‘The federal government should not own the mortgage market,’ he said at the event, according to Bloomberg News.

Other issuers seeing an increase RMBS business include Redwood Trust, PennyMac Mortgage Investment and JPMorgan Chase.

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